Increase driven mainly by a surge in e-commerce activities
Aramex Q2 2020 revenues grew by 4% to $363 million, compared to $348 million in Q2 2019 driven mainly by a surge in e-commerce activities resulting from increased online shopping.
Aramex’s Revenues in the H1 2020 increased by 1% to $688 million, compared to $684 million in the corresponding period of 2019.
Net Profit in Q2 declined 23% to AED 94.4 million, compared to AED 123 million in Q2 2019.
Net profit was negatively impacted by the rise in unforeseen costs prompted by the global onslaught of COVID-19 such as the exceptional challenges in cross-border operations due to border closures, the increase in line haul costs which in turn impacted profit margins in both International Express and Freight.
For Domestic Express, higher costs were incurred related to scaling operations in core markets in response to the surge in shipment volumes.
Additionally, in line with Aramex’s commitment to providing safe and essential services to its customers, there were increased costs related to personal protective equipment for Company employees and other health and safety measures such as sanitization of warehouses, sorting facilities and fleets.
Over the period, the Company introduced cost containment measures and expects most measures to remain in place for the second half of the year in light of the uncertain market outlook and lack of visibility of second and consequent COVID-19 waves.
Aramex’s Net Profit in the First Half of 2020 fell by 30% to AED 162 million, compared to AED 231 million in H1 2019.
Bashar Obeid, Chief Executive Officer of Aramex, said: “Given a very challenging period, I am pleased with Q2 results, the heroic performance of our employees and the strong growth in overall express shipment volumes.
“Within our business lines, Domestic Express was the standout performer driven by exceptional growth from e-commerce related deliveries.
"We also benefitted from a surge in demand for healthcare related shipments which is positively reflected in our Freight and Domestic Express service lines.
“As a business, we are now operating in a higher cost environment which is adding pressure to our profitability margins. While some factors pushing costs higher may dissipate or normalize over time, such as sanitization costs, others may adjust higher for an extended period, such as line haul costs.
Othman Aljeda, acting Chief Operating Officer and Regional CEO for Aramex in Europe, North America and Asia, added: “Over the period, we remained focused on efficient and innovative problem solving to resolve several operational challenges while managing a 26% growth in overall Express (International and Domestic) shipment volumes."
Aramex's cross-border International Express decreased by 1% to AED 582 million and shipment volumes fell by 4%.
However, Shop & Ship, a component of this business line, enjoyed a good quarter, especially from US origins.
The Domestic Express business grew by 31% and e-commerce volumes in core markets surged 133% over the period with particularly strong contribution from Saudi Arabia, UAE and Kuwait.
This was driven by a very strong demand from e-commerce activities and particularly from increased online shopping pre-rise in VAT and custom duties in Saudi Arabia.
Freight-Forwarding decreased marginally by 3% because of the decline in demand from the oil and gas and the traditional retail segments. However, the healthcare segment continued to perform exceptionally, alleviating some of the pressure from other segments.
The Logistics & Supply Chain Solutions business was unchanged year-on-year at $23 million.
Commenting on Aramex’s outlook for the remainder of 2020, Bashar Obeid said: “We are not out of the woods yet; the shape of the global economic recovery is still uncertain, and it is too early to determine a clear trend or change in consumer behavior."